Congress is responsible for passing annual appropriations to fund government agencies. If Congress neglects to pass funding bills, government agencies are forced to shut down. Follow all of Federal News Radio's government shutdown coverage from the past several years.

Contractors do their best to weather shutdown storm

Tony Crescenzo, chief executive officer, Intellidyne

Devon Hewitt of the Protorae Law Group

If you're a furloughed fed, Congress may vote to pay your entire salary
retroactively once the government shutdown ends.

It's not that way for federal contractors, especially the smaller ones. The
shutdown means many of them have received stop-work orders from federal agencies,
forcing them to make tough decisions.

Tony Crescenzo, chief executive officer of IntelliDyne, a technology services
firm, told Federal Drive with Tom
Temin and Emily Kopp his company has had to come up with contingency plans
in case it receives stop-work orders on any of its government contracts.

"Into about day four of the shutdown, we began to see a vacillating list of stop-
work orders," he said. "The numbers moved day-to-day and they've moved since the
shutdown started."

To start with, Intellidyne allowed employees to take all of their accrued paid
time off. Then, depending on the size of the contract and the ability of the
company to finance it, they could "go into the hole" a bit to have a negative
balance in paid time off. At that point, though, companies typically begin putting
their employees on unpaid leave.

"When we looked at the breadth of the effect on our company and our employees
— we had recently won several contracts, had new employees who had accrued
no leave — we weren't really willing to let those employees go right on
leave without pay, given that they had just left their jobs for a job with us,"
Crescenzo said.

After conferring among themselves, members of the Intellidyne executive team
looked at their own leave balances and offered them up to their employees to use.

"I looked at mine and said, 'Wow, I've got 110 hours of leave to take. It's very
easy for me to give all but four days up so I can take some time between Christmas
and New Years,'" Crescenzo said. "Twenty-four hours later, we had, I think, about
250 hours of leave for our pool of employees to use."

The executives then reached out to the rest of the company and a within 24-hours a
bank of 1,500 vacation hours were available.

New protections for subcontractors

Devon Hewitt of the Protorae Law Group told Federal Drive she has
seen an increase in the number of prime contractors scratching subcontractors and
taking work in-house. One of the reasons for this is the lack of work
available.

"Prime contractors want to use subcontractors and, where there are subcontracting
opportunities, primes must use subcontractors to fulfill their subcontracting plan
requirement," Hewitt said. "They commit to the government that they will
subcontract a certain portion to small businesses. However, now that supply is
smaller, I think primes feel less flexible in allocating work to subcontracting
and they want to keep the level of work and profits in-house in order to keep
constant the revenue they've had in the past, which has now shrunk because there's
less work to go around."

The prime has many ways to dump a sub, from not renewing an option on a contract
to not having the sub work on new task orders. If the prime's contract allows it
to dismiss the subcontractor at any time, the prime may just simply tell the sub
it's no longer needed.

"There are various decision points in contract performance that would allow a
prime contractor to take the work back," Hewitt said. "But luckily there are new
regulations that are going to help subcontractors."

A ruling in August prohibits primes from preventing a subcontractor from
contacting the government about work that the subcontractor will be receiving.

"Prime contractors now have to represent to the government that they will make
good-faith efforts to use subcontractors if they have participated in the proposal
effort and if they do not use the subcontractor in the same scope amount and
quality used in preparing and submitting the proposal," she said. "They have to
notify the contracting officer and the contracting officer is compelled to
consider that in evaluating the performance of the prime contractor

Hewitt blogged about another recent ruling on Multiple Award
Contracts (MACs) that implements Section 1331 of the Small Business Jobs Act of
2010.

That rule provides additional tools to contracting officers to raise the
participation of small businesses when they're handing out MACs.

Originating in the Small Businesses Jobs Act, the new tools offer a way for
contracting officers to work with the MACs schedule process and identify places
within those contracts to set aside awards or orders that are exclusively for
small businesses.